Malibu Is Top Bidder on Building Slated to Become City Hall

• Current Landlord Indicates Intention to Hold Municipality to the Remainder of Its Lease

BY BILL KOENEKER

Malibu city officials announced this week that they were the only and winning bid at $15 million in an auction to acquire the building that was the former home of the Vineyard Christian Fellowship and currently houses the Malibu Performing Arts Center.
The purchase of the 35,000-square-foot building, accessed off Stuart Ranch Road and located directly behind the current City Hall, will be funded through the issuance of certificates of participation.
Certificates of participation, or COPs, are a commonly used form of lease purchase financing that does not require voter approval. The lease purchase agreement is divided and sold to multiple investors in fractions, similar to stocks.
The COPs will be paid back over a 30-year period from the savings in rent payments, according to a municipal press release, which indicated there will be no extra cost to the taxpayers.
The city is currently paying $800,000 rent annually for the 15,647 square feet it now occupies at the current City Hall.
“This means we will be making payments toward our own building instead of paying rent, and I’m thrilled to have a permanent home for City Hall,” said Mayor Andy Stern. “The long-term cost savings and added value to our residents was the driving force of this purchase.”
There is still three years on the lease, or about $2 million owed in rent to the city’s landlord, Miramar Property Investment.
Miramar’s general partner Patricia Gartland told the Malibu Surfside News that the company was not prepared to let the city out of its lease.
Stern and other city officials are indicating that they are prepared to sublease the building if necessary.
Gartland said, “Any tenant is allowed to sublease, but it has to be pre-approved by Miramar.”
It was a full day of pins and needles last Friday for council members as they gathered in closed session, staying in touch during the auction proceedings with city operatives and attorneys to be able to discuss the upper limit council members were willing to go.
The bidding was supposed to start at 10 a.m. but was halted by 12:30 p.m. when a potential bidder showed up but then was not considered qualified by the judge, who gave the party several hours before the bidding would resume.
The auction resumed at about 2 p.m. when the city made its successful bid and no other bidders returned or showed up.
There is the matter of a 10 day appeal process, but municipal officials seem confident they will win out.
Stern said space planners and architects would immediately begin looking at the building that currently houses a 500-seat theater, recording studio, rehearsal space, banquet facilities and office space.
The mayor, who said he thought the city could move in within six months, said it is hoped the city can utilize some of the production facilities to create a revenue stream. He also indicated that municipal officials do not want to make double payments—to have to pay for the debt acquired and the lease payments on the current offices.
Council members, at this week’s regular session, agreed to a contract with Stradling, Yocca, Carlson & Rauth and Stone and Youngberg to provide the services invoved in issuing certificates of participation to fund the acquisition. Those firms were used by the city to provide COPS for the acquisition of Legacy Park.
If the city issues $15 million or less in COPs, the investment banking and underwriting services will be $117,500, according to a staff report.
Since only a small area of the Malibu Performing Arts Center has been built out as office space, major interior design changes will be required.
“In order for the building to be functional as a city hall, the city will need the services of an architect to redesign the interior space. An RFP will have to be issued for architectural design services, according to a staff report.